BONDS – AT BULLISH TURNAROUND POINT
BONDS AT TARGET BUY AREA FOR BOTH, INVESTORS AND TRADERS
Bonds are finishing it’s wave 2 correction, reaching “extreme” area which presents excellent “risk-reward” structure for both long term investors as well as short term traders.
Stops could be placed below recent major low (-6% from here) or just below “all time low” at $80.5 which is -9% below today’s current price of $88.33.
On the flip side, the next target up is between 38.2% and 61.8% retracement level from the 2020 top- 2023 bottom which presents the upside opportunity of 35%-60%, giving traders / investors 3x-10x risk-reward ratio.
TLT is just about to complete it’s C corrective leg in 5 subwaves. Low could be in place anytime, but we would prefer one more marginal low to complete it’s minuette wave 5, and make an RSI divergence which will signal the current low for this cycle and great risk-reward opportunity to enter the long position in TLT.
STOP LOSS could be placed just below $82.50 (last major low), or if you want to play safe, stop loss could be placed at $80.25 which is just below All Time Low at $80.52
Next logical target for TLT should be 38.2% to 61.8% retracement from 2020 Top to 2023 Bottom, which presents an upside potential of 35% – 60%.
Risk averse traders could put a 1. target $92 (+4% form here) and move the Stop Loss to the “entry point”. This target is the mid point of the C-leg where they could sell a partial holdings to capture a small gain and protect the rest of the position and let the rest of the investment run up worry free.
For those who live in countries with large (larger) tax regime in income / divident gains should consider buying European alternative of TLT, symbol DTLA (on London Stock Exchange), which accumulates cupons form the underlying bonds and reinvest them into the underlying asset, hence investors will not have to pay income taxes and they will have to pay only capital gain taxes which are more favourable in many countries than income based taxes.
